u/Nikolaibr

I'm wondering about this primarily as a question of the federal government's long-run balance sheet.

Suppose the U.S. established an independently managed sovereign wealth fund with a mandate to hold a passive, highly diversified market portfolio. It would be capitalized gradually through regular federal appropriations rather than through a large one-time issuance of debt.

Over sufficiently long periods, a diversified equity portfolio has a higher expected return than Treasuries. The federal government also has an unusually long investment horizon and greater capacity to ride out market volatility than an ordinary investor.

So, in principle, could it make economic sense for the federal government to deliberately maintain some leveraged exposure to diversified productive assets using their own debt creating ability?

Or does the U.S.'s existing debt burden make it unacceptable to attempt making a spread?

Has anyone written about or modeled this idea?

Suppose the U.S. replaced employer-sponsored insurance premiums with an employer payroll contribution financing universal health insurance. To what extent should the incidence of the former employer premium eventually appear as higher wages, versus being absorbed elsewhere?

EDIT: This expands more on my reasoning for asking the question

I'm currently doing my own project to assess what I think my ideal universal system would be. One of my objectives is to see what positives it would give to the broader society, and what mechanisms could be used to deliver it with the least amount of negative distortions.

But one thing I've come across is that there could be a few of the benefits outside of just "everyone can get affordable healthcare".

When thinking about what such a payroll tax would look like. I started with an average spend per employee currently spent on healthcare benefits, and this revealed something.

The degree of compensation any particular worker gets (and thus the employer spends) in healthcare is so varied, not just between companies, but also within companies. A single worker costs less in healthcare compensation than a married worker. And this is especially the case in firms that offer generous benefits, and not just because the family premium is higher.

Subsequently, if the spouse of that employee has poor benefits elsewhere, they will choose to be on their spouses plan.

Given this, employers offering better benefits are subsidizing the labor costs of those offering poor benefits indirectly.

So replacing healthcare spending with a payroll tax gives a uniform healthcare compensation figure relative to payroll.

My intuition tells me this frees up a lot of savings for firms with generous benefits that may lead to upward wage pressure, but with the additional burden small firms will incur, wages in those firms will face slower long-term wage growth.

I came to an idea some time ago when thinking about wealth inequality.

The more wealth you already have, the easier it becomes to generate additional wealth. Large portfolios have better diversification, access to investments unavailable to ordinary people, professional tax planning, and the ability to let assets compound uninterrupted for decades.

Then we layer a tax preference on top of that with reduced rates on long term gains. I think tax preference on investment is good, because the economic benefits of more investment outweigh forgone tax revenue. But if we're going to essentially subsidize investment through preferential capital gains treatment, It makes sense to me for that subsidy to apply primarily to people who wouldn't otherwise invest. Large income earners will likely invest regardless, since they only need so much liquidity. But average workers should get some extra incentive to direct any available cash towards investment to grow their own wealth.

I'd rather see the tax preference work like this. Give a high discount (I'd say tax free) on the first portion of annual investment income (including things like dividends, savings interest, realized gains, and perhaps even a percentage of value in stock compensation) Regardless of AGI, say the first $5k and then gradually phase out the discount as investment income rises until it eventually reaches ordinary income rates. Maybe anything more than $50k in investment income would be where the tax preference ends. Anything more gets taxed as regular income. The current rates on long term gains already do this to some degree, but still having a preference above a certain level makes no sense to me. And the fact that the preference only exists up to a certain AGI means that middle-income earners still lose much of the benefit, and therefor much of the incentive.

I think this might have a dual benefit of reducing wealth inequality without massive economic distortions by shifting the compounding effect of wealth accumulation more in favor of those who need the most help starting that accumulation, while also collecting extra tax revenue indefinitely.

It also doesn't attempt to close the wealth gap via redistribution.

I came to an idea some time ago when thinking about how to deal with wealth inequality.

I'm curious to see if my thinking makes any sense from people who actually understand taxation better than I do.

The more wealth you already have, the easier it becomes to generate additional wealth. Large portfolios have better diversification, access to investments unavailable to ordinary people, professional tax planning, and the ability to let assets compound uninterrupted for decades.

Then we layer a tax preference on top of that with reduced rates on long term gains. I think tax preference on investment is good, because the economic benefits of more investment outweigh forgone tax revenue. But if we're going to essentially subsidize investment through preferential capital gains treatment, It makes sense to me for that subsidy to apply primarily to people who wouldn't otherwise invest. Large income earners will invest regardless, since they only need so much liquidity. But average workers should get some extra incentive to direct any available cash towards investment to grow their own wealth.

I'd rather see the tax preference work like this. Get rid of long term vs. short term. Give a high discount (I'd say tax free) on the first portion of annual investment income (including things like dividends, savings interest, realized gains, and perhaps even a percentage of value in stock compensation), say the first $5k and then gradually phase out the discount as investment income rises until it eventually reaches ordinary income rates. Maybe anything more than $50k in investment income would be where the tax preference ends. Anything more gets taxed as regular income. The current rates on long term gains already do this to some degree, but still having a preference above a certain level makes no sense to me. It seems the effective subsidy isn't accomplishing the goal of incentivizing new investment at that level, so it's better to collect the revenue instead.

I think this might have a dual benefit of reducing wealth inequality without massive economic distortions by shifting the compounding effect of wealth accumulation more in favor of those who need the most help starting that accumulation, while also collecting extra tax revenue indefinitely.

I think some European countries use a similar system, thought I don't know their reasoning.

I haven't worked the numbers yet to see where ideal levels would be, or even if some unintended second order effects could come into play, but I think the reasoning is sound.

I would not however, ever consider taxing unrealized gains. For many reasons. The main one being the massive economic distortions it would cause.

Any glaring flaws here?

I will begin this post with acknowledgment that I am not a trained economist. This will likely be clear with how I phrase things. I am someone who has been interested in economic theory for many years to different degrees. I'm just hoping people much smarter and more knowledgeable than I can help me work through something.

It seems to me that there are three main factors of production. Capital, labor, and land (and other fixed resources). Ideally, each of these has an owner, who receives compensation for their factor. Capital owner - ROI, Worker - a wage for their labor, Land/Resources - ideally, the society as the owner of the commons.

I think AI use introduced a novel quasi-factor in production. It's a hybrid of the capital to do the computation, and the intangible societal knowledge used in training. I assert that the latter is just another way to define an aspect of "the commons". Currently, the owner of this resource is not being compensated in this factor of production. Businesses are thereby exploiting the commons to the detriment of society.

What is a way that society can recapture their share of this added value being generated by this novel quasi-factor of production?

Is my thinking coherent? I have to imagine someone has explored this idea before, but I can't seem to find any robust thinking about solutions?

I initially started this because I was curious about Jellyfin. I had a decent amount of media saved on  various external HDDs. I was kind of annoyed that it was limited to whatever computer I had connected it to. I knew about the concept of a NAS, and am reasonably competent technologically. So about 3 months ago I started looking in sharing this over my home network, and it led to me getting a bit obsessed… I was not ready for how much refining I would end up doing, but it’s been quite fun, and I’ve learned a TON, especially about Linux (have been using Linux for years on most of my computers, but never a power-user) and networking.

Initially I set up the few externals via USB to an old HP Elitedesk 800 G5 Mini, with an i5-9600T, 16GB Ram, and a 1TB NVMe that I had sitting unused.

1. Started with Vanilla Debian (no DE), headless, with CasaOS, doing any terminal stuff via SSH. I don’t recommend this. (It worked fine, but it’s no longer being developed, if you like their webUI, go with ZimaOS, you also won’t need to have an underlying distro).

- Started with the following containers (initially knowing nothing about how Docker works) Jellyfin but soon added qBittorrent, Navidrome, Komga, and Audiobookshelf.

- Tailscale installed on Debian, not as a container, this just worked better with less configuration of containers.

- Spent a few weeks arranging files, fixing metadata so that all the apps synced well to what I want. Found a bunch of apps for my other devices to access the various containers being served. Working pretty well.

- Bought 4 more 8TB Baracudas (starting from nothing, these are not a good choice, since they are SMR, but I already had one of these in my setup, so I was fine with the slowness, and my current setup is configured to make up for their problems in my use-case)

- Hit issues with the stock external enclosures and USB docks with lots of random dropouts of the drives. SATA – USB bridges in these are not great, which I learned through a bunch of online searches and ChatGPT, so I bought 2 CENMATE 4-Bay enclosures to connect via USB (THIS WAS A MISTAKE, DO NOT USE THESE) – was still noticing random dropouts, turns out USB is just not a good way to do this. I know others have been successful, but this was not my experience. I used high quality cables, only connecting via USB-C would have worked better, since I was mostly seeing dropouts in USB 3.0 ports, but I only had one C-port available.

2. Since I was getting deeper, and wanted more control than the outdated CasaOS was giving,  a friend recommended Unraid, especially since I liked the idea of having a protected array while having mixed size drives, This is where the flaws of my physical setup really started showing up.

- The problem of the random dropouts was an annoyance with CasaOS, but with Unraid, they are simply not acceptable. I would never be able to develop parity, because the build would take way too long without a dropout happening, and the parity build would fail. USB for anything on the array was simply not going to work, but SATA on the Mini is very limited.

3. What I should have done all along is build a NAS in a proper case, but at this point, I kind of took it as a challenge to see where I could take my Mini, which leads to the following setup.

Two - M.2 to SATA Adapters, - ASMedia ASM1166 Chip – Each allowing 6 SATA connections.

One – 1TB NVMe SSD – Connected via a USB-C enclosure – My “fast” drive, for appdata and VMs

Two – 1TB 2.5” SATA SSDs – in RAID1 for my cache pool

The Storage Array – Total of 51TB usable

- 5 – 8TB Baracudas (SMR)

- 1 – 10TB WD-White (CMR) with 3.3v pin removed

- 1 – 1TB Baracuda (CMR) – Used for backups of the “fast” drive, since it lacks redundancy

- 1 – 16TB WD-White (CMR) with 3.3v pin removed – Currently being precleared to become my parity disk, allowing larger replacements for the rest of the array

An old Rosewill 500W PSU I had sitting around, with little use – powers all the drives. Synced using a 5 volt relay connecting the PS_ON on the 24 to a USB on the back of the Mini.

The CENMATE enclosures were a bad purchase, but I’ve since repurposed them by removing the PCB, and Dremeling out the whole back panel. I simply use these as cages, with some 140mm fans stuck to the front. These actually give great airflow like this, so I didn’t totally waste my money, just not as good as if I had done it right from the beginning.

Obviously since the SATA cables stick out too high, the lid is off, and I have another fan blowing in to cool the chipsets on the SATA adaptors, and NVMe enclosure sitting on the side of the Mini.

So that’s what I have, and I’m pretty satisfied with it, at least for the next few years.

The way I deal with having SMR drives in the array is that I have all ingest goes directly to the cache pool, and the mover scheduled daily in the middle of the night. I don’t ingest much data every day, so I have plenty of space in the pool.

The other Elitedesk is just a Debian machine I remote into. It needs a better use.

It's all on a 900w UPS, and the whole setup including the extra Elitedesk, Router and Modem draws anout 90w at idle, about 130w if it's really active. I imagine the Parity build will be in the 150w-160w range

I guess I’m properly in the Home Lab world now… Now to fiddle with more interesting containers.

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